Startup Internationalization: Is it a Risk Worth Taking?
I think we can all agree that being bold and taking risks is synonymous with successfully running a startup.
However, fruitful risks must be calculated, considered, and scrutinized. Otherwise, you may as well invest your future into a lottery ticket. No more is this notion made abundantly clear than with the decision to internationalize your startup’s operations.
Embarking on an internationalization initiative means forming of a sound, intricate strategy. It also necessitates avoiding the backbreaking stumbling blocks I’m discussing below:
A Founder’s War Against the Clock
Fortune Never Favours the Hesitant:
Moneysupermarket – to this point – has failed to internationalize primarily due to the maturation of the UK market. The organization idled and agonized over expanding for too long, resulting in a stifled, lacking share price.
As an innovator and pioneer in British finance, Moneysupermarket was worth over $1 billion in the UK. Yet, inaction halted the organization’s progress.
Jumping the Gun Can Ruin a Good Thing:
Alternatively, there’s the story of Housetrip, a vacation rental marketplace out of Europe that was initially backed by more than $50 million.
In short, Housetrip expanded too fast across US and European markets and found itself devoured by a lack of brand loyalty. Also, the likes of Airbnb and similar platforms skyrocketed the price of performance marketing.
Soon enough, Housetrip was bought out by TripAdvisor.
Key Takeaway: Strike When the Iron is Hot:
With internationalization, startup founders can’t strike when the iron hasn’t reached its boiling point, nor when it’s cooled off from its peak.
Founders must expand their focus to the behaviours of the market space. Being too wrapped up in product development and neglecting the big picture leads to internationalization efforts with wretched timing.
Misinterpreting the Marketplace
Pretending that ‘the Same’ is Something Different:
Finding success in smaller adjacent markets is no indication of internationalization success. After all, there’s rarely any need for genuine expansion (e.g., new office spaces, translation, product adaptation).
Hailo, for instance, expanded to Ireland after it carved itself a niche —but was never going to compete with Uber. Thus, the Taxi-based platform found itself merged with MyTaxi by mid-2017.
Seeing Your Products Through International Eyes:
Adjacent expansion only proves a startup to be a big fish in a different section of a small pond. Diverse, international appeal can’t be conveyed by “expanding” to a market that’s mostly a duplicate as the original.
This can be interpreted by investors as a sleight of hand that conveys a lack of ambition. If you’re internationalizing, thoroughly study and examine the nuances of these new markets.
More specifically, globalize your product and marketing strategy. Immerse yourself in consumer cultures, languages, and demands that vastly differ from your startup’s home turf.
Does it Make Sense to Internationalize?
Internationalization can do absolute wonders for your startup, but it’s not a tick-box item.
Take the Dutch eCommerce business Coolblue. It has generated over €1 billion of revenue over two decades, never expanding beyond Belgium. There was no need to internationalize, so they didn’t.
That doesn’t mean you must follow the above example. What it does suggest is that you should only internationally expand when and if it makes sense.
Have we missed anything or have any questions? Get in touch
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You might also enjoy these popular International Expansion related articles When Is The Right Time For A Startup To Expand Into International Markets?, What To Consider When Expanding A Business Internationally and How to take your business international guide on the same topic.
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